The high court's bench had yesterday suspended the sentences awarded to seven persons in the case, which related to the mishap in which 94 children lost their lives.
A division bench of Justices M Sathyanarayana and V M Velumani also modified the sentence in respect of two other convicts and abated it against one who had died.
Inbaraj, secretary of the parents welfare association, who lost two sons in the accident, said the district court had delivered a judgement 10 years after the incident adding that the modification of sentences had come as a shock to them.
"If the state government fails to appeal against the acquittal, we will move the apex court," he said.
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Mahesh and Shanthi, who had lost their son in the fire, said "the original judgement was delayed and now even the punishment awarded has not been sustained. If the accused come out of jail, it would embolden others who fail in their duty. Hence, the state government should file an appeal."
In all, 21 persons were charged for offences under various sections of IPC in connection with the incident.
Palanisamy was awarded life imprisonment and the bench modified the sentence awarded to him to one of the period already undergone during investigation, trial and post conviction. It also modified the fine amount to Rs 1,16,500.